What is Invoice Factoring?
Invoice factoring, also known as accounts receivable factoring, is a financial tool in which a company sells its accounts receivable, or a portion of them, to a factoring company to quickly raise capital.
This approach is intended to safeguard cash flow against unpaid invoices, particularly those where the company has extended credit terms to its buyers or customers, typically ranging from 30 to 90 days.
This method can be advantageous for businesses that invoice their commercial customers on credit, as it aids in managing working capital, mitigating credit risk, maintaining cash flow, or meeting the financial requirements of expansion.
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